You May Be Doing The Right Thing And Still Paying Too Much Workers Comp

 

Wrong Job Classification Codes Costs Employers Money
 
Employers who have a complete safety program, proper medical management of their workers’ compensation claims and a strong return-to-work program can overpay for their workers’ compensation insurance if they (or their insurance broker or their insurance company) make a simple mistake.  The use of the wrong classification code(s) for their business is a simple mistake that has cost a lot of employers excessive workers’ compensation premiums.
 
The National Council on Compensation Insurance (NCCI) is the insurance data and rating bureau used in 38 states to set insurance rates.  The 12 other states either utilized a modified version of the NCCI classification codes or have their own classification codes. The NCCI has over 700 classification codes to describe the work done by businesses.  Some states that use their own classification codes, and not the NCCI codes, have in excess of a 1,000 codes. [WCx]
 
 
Class Codes Are Job Definitions Used by Insurance Company
 
Classification codes are basically a list of job definitions used by the insurance company underwriters to describe your business and to place your business in a group of businesses that do the same type of work.  The classification codes are a four digit number with a job description definition assigned to each number.  The classification codes are used by all insurers writing business in the state.
 
Classification codes are used for several reasons including:
 
·         Employers within the same industry have similar exposure to risk of loss
 
·         The cost of workers’ compensation can be fairly distributed among employers
 
·         Large employers with many different types of operations and many different types of employees would be impossible to rate accurately if every employee or every occupation was individually rated
 
·         The classification of employers promotes safety, as the employers knows they are being compared to other employers in the same business
 
Every Code Assigned Rate Used to Calculate Premium
 
Every classification code will have an assigned rate that is used to calculate the workers’ compensation premium.  Improper classification of a business can result in the wrong rate being used to calculate the premium. 
 
 
3 Occurrences to Select Wrong Code
 
Insurance Broker
 
The errors in classification codes occur most often with the insurance.  Unless the broker is both very well versed in the 700+ classification codes AND has a very good understanding of the nature of your business, the broker may select the wrong classification code.  The wise broker will ask the prospective client various questions designed to establish the types or work performed by the employer and the exact nature of the employer’s business.  Based on the answers provided by the employer, the broker will assign a classification code for the business. [WCx]
 
 
Insurance Company
 
A second point in the process where the employer may receive the wrong classification code is when the insurance company underwriter reviews the new coverage application.  If the underwriter concludes the broker used the wrong classification code, the underwriter will change the classification code to the code the underwriter believes is a better match in describing the nature of the insured’s business.  Of course, the underwriter can make the wrong selection as well, resulting in the employer being charged the wrong amount for the workers’ compensation insurance.
 
 
Insurance Company Auditor
 
A third point where the wrong classification code can be assigned to the employer is when the insurance company performs a premium audit after the policy period has ended.  If the insurance company auditor reviews the policy application information and determines a different classification code should have been used, it again can be changed.
 
 
Hire Premium Auditor If You Have Concerns
 
If you as the employer have any concerns about whether the correct classification code is being used, you can hire an independent premium auditor to verify the accuracy of the premium you are being charged.  As premium auditors normally work on a percentage of the savings basis, the employer who is concerned that an incorrect classification code (or other errors have been made in the calculation of the work comp premium) should hire an independent premium auditor.  For assistance in locating a premium auditor, please contact us.
 
 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

Change In Workers Comp Premium Calculation Will Impact Significant Majority of Employers

 

Greater Reward & Higher Punishment for Amount of Claims

 

The National Council on Compensation Insurance (NCCI) is revising the way workers’ compensation insurance premiums are calculated.  The revisions will reward the employers with below average claims with lower rates while increasing the rates for employers who have a higher than an average number of claims.

 

 

Change Will Impact Significant Majority of Country’s Employers

 

Starting January 1, 2013, the method used by NCCI to calculate the workers’ compensation premium for both new policy purchases and policy renewals will be altered.  The change will impact a significant majority of the country’s employers as the NCCI premium calculation method is used in 38 states to set workers’ compensation premium rate.   Every state Department of Insurance has approved the rating change.  [WCx]

Independent rating bureaus in Indiana, Massachusetts, Michigan, Minnesota, New York, North Carolina, Texas and Wisconsin are reviewing their premium calculation method and may, or are, also changing their premium calculations methods following the NCCI lead.  Employers in California, Delaware, New Jersey and Pennsylvania will probably not be impacted as the independent rating bureaus in those 4 states used premium calculation methods significantly different from NCCI.

 

 

Three Factors Go Into Workers Comp Premium

 

There are three factors that go into the calculation of an employer’s workers’ compensation premium.  They are:

 

  1. The rate assigned to each payroll classification in the business
  2. The total amount of payroll for each classification code
  3. The experience modification factor.

 

Your insurance premium is calculated as:

 

     Payroll classification  X  $100 of payroll

  X  experience modification factor = premium

 

The experience modification factor is the only factor that the employer can control without reducing the number of employees.  It is also the part of the calculations where NCCI is reconfiguring how workers’ compensation premiums are calculated.

 

 

Current System Has Been in Place for 20 Years

 

The current system of calculating the experience modification factor has been in use for about 20 years.   To calculate the experience modification factor, every loss is split into two parts, a primary portion and an excess portion, with both the primary losses and excess losses being used to calculate the experience modification factor.  The split point is currently $5,000.  The first $5,000 is referred to as the primary loss.  The amount over $5,000 is the excess loss.  Every loss has a primary loss, but only losses over $5,000 have an excess loss.

 

Both the primary loss and the excess loss are used to calculate the experience modification factor, with the primary loss carrying a heavier weight in the premium calculations. The primary losses are a direct reflection of the frequency of claims. The excess loss measures the severity of claims.  Therefore, the greater the number of claims the employer incurs, the higher the workers’ compensation premium.

 

 

Split Point of Primary and Excess Losses Increased from $5,000 to $10,000

 

Effective January 1, 2013, the split point is being raised to $10,000 in the calculation of the number of primary losses and excess losses.  This will result in a reduction in the number of excess losses.  The work comp claims between $5,000 and $10,000 will no longer have an excess loss.   The split point will change again on January 1, 2014 to $13,500 and will be revised again on January 1, 2015 to $15,000.   Each of these changes will increase the weight of primary losses in the calculation of the experience modification factor. [WCx]

 

 

Recommendations to Minimize Potential Workers Comp Rate Increases

 

The following are recommendations for employers who want to minimize the potential workers’ compensation rate increases;

 

  • Tighten up the work place safety program to lower the frequency of claims.  This will have the greatest positive impact.
  • Invest in loss control to identify potential sources of injury and eliminate those sources.
  • Improve and enforce the return-to-work program to reduce the number of claims that have an excess loss portion.
  • Focus on improving your medical management of claims to reduce the number of claims that have an excess loss portion.

 

The upcoming changes in the calculation of the experience modification factor will penalize the employers who have a greater than average number of claims for their payroll classification code while rewarding those employers who have a better than average loss history.  For assistance on reducing your workers’ compensation cost, please contact us.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

 

Majority of Workplace Assaults are Committed by Healthcare Patients

Workplace homicides "are not crimes of passion committed by disgruntled coworkers and spouses, but rather result from robberies." And the majority of workplace assaults are committed by healthcare patients.

 

Those are just some of the findings from a recent report by the National Council on Compensation Insurance (NCCI). [WCx]
 
 
The report examines the many aspects of work-related homicides and injuries due to assaults, and extends a series of studies published by NCCI on workplace violence with three years of additional data through 2009. For the most part, previously observed patterns and key findings are largely unchanged.

 

Key Findings
  • Work-related homicides and injuries due to workplace assaults remain well below levels observed in the mid-1990s. This is consistent with the patterns of declines in rates of homicide and aggravated assaults reported for the country as a whole, although workplace homicides have declined more than the homicide rate generally, while workplace assaults have fallen in line with declines in aggravated assaults overall.
     
  • Homicides account for 11% of workplace fatalities. Nonfatal assaults by persons make up less than 2% of total nonfatal lost work-time (LWT) injuries and illnesses, but that share has been increasing.
     
  • Homicides due to robberies and similar criminal acts fell markedly over the late 1990s (but still make up 69% of all homicides), due largely to the decline in the homicide incidence rate for taxi drivers. The work-related homicide rates for these workers are now comparable to those for high-risk retail workers such as service station attendants and barbers.
     
  • In contrast, homicides committed by work associates (a Bureau of Labor Statistics [BLS] category made up of both coworkers and customers) have increased to about 21%. Interestingly, this reflects an increase in violent acts by customers to 9%. Despite the headlines, the share of workplace homicides due to coworkers has remained steady at about 12%, and the actual number of such homicides has been in the 50 to 60 range in recent years.
     
  • The decline in the rate of workplace assaults has lagged the steady decline in the rate for all lost work-time injuries and illnesses. This reflects a notable change in the composition of the US workforce and, in particular, the ongoing increase in the share of healthcare workers, who experience remarkably high rates of injuries due to assaults by patients. This is especially common in nursing homes and other long-term care facilities. In fact, 61% of all workplace assaults are committed by healthcare patients. For assaults, coworkers make up just 7%, and someone other than a healthcare patient or coworker comprises 23%. The remainder is unspecified.
     
  • Based on NCCI data, injuries resulting from a crime are more severe than injuries resulting from other causes and more likely to involve a fatality. In contrast, severity for injuries resulting from being struck by a fellow worker or patient is below average.
     
  • Risk factors linked to an increased likelihood of workplace violence published by the National Institute for Occupational Safety and Health (NIOSH) in 1996 are still consistent with the types of occupations and industries at highest risk for workplace violence today.
     
  • Workplace assaults account for less than 2% of all injuries.
 
To view the complete report, visit: https://www.ncci.com/documents/Workplace_Research.pdf
 
 
Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He is an editor and contributor to Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: Info@ReduceYourWorkersComp.com.
 
 
 
WORKERS COMP MANAGEMENT GUIDEBOOK:  www.WCManual.com
WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php
 
 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

Oklahoma Insurance Commissioner Notes NCCI Decrease Cost Request

 

Oklahoma Insurance Commissioner John Doak, recently reported the company, which manages the nation’s largest database of workers compensation insurance information, has filed a request with the Oklahoma Insurance Department to decrease the cost of workers comp insurance in Oklahoma.
 
 
According to Doak, the National Council on Compensation Insurance Inc. (NCCI) filed to reduce workers compensation insurance rates in Oklahoma by 1.7 percent starting Jan. 1, 2012. The Commissioner said NCCI attributed the rate drop to this year’s passage of Oklahoma Senate Bill 878. Before the passage of SB 878, rates were expected to increase again. (WCxKit)
 
 
Reforming Oklahoma workers comp law was high on Governor Mary Fallin’s agenda, and SB 878 received overwhelming support from both parties in the Legislature.

Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com.


Our WORKERS COMP BOOK:
www.WCManual.com

WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php
 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

NCCI Publishes 2010 Workers Comp Prescription Drug Study Update

NCCI Holdings Inc. recently unveiled an updated study that shows that the volume of prescription drugs dispensed to workers compensation claimants has risen sharply—putting upward pressure on costs.
 
 
The volume of prescription drugs dispensed by physicians to workers comp (WC) claimants has risen sharply in recent years—putting upward pressure on WC costs. This updated NCCI study investigates the increase and other issues associated with WC prescription drug (Rx) costs. (WCxKit)
 
 
Key Findings
 
1.      WC costs due to physician-dispensed drugs rose dramatically in 2008.
2.      Three-fourths of WC repackaged drug costs originate from physicians
3.      Lower than expected emergence of Rx costs has prompted us to lower our projected ultimate Rx share of total medical from 19% to 18%.
4.      After two seemingly abnormal years in which price change was the dominant factor affecting per-claim WC Rx cost increases, utilization change has once again taken its historically dominant role.
5.      OXYCONTIN® has become the top prescribed (in terms of paid dollars) WC Rx. A successful patent defense, which resulted in the removal of the extended release generic version of OXYCONTIN® from the market, is likely the major contributing factor.
 
 
In addition to a new look at physician-dispensed drugs NCCI has updated prior analyses for:
 
6.      The prescription drug share of total medical costs by injury year
7.      Changes in price, utilization, and cost
8.      Prescribing patterns
9.      Drug rankings by overall cost
 
 
Prescription drugs have been a significant driver of WC medical costs for many years.
 
 
NCCI first examined WC Rx issues in 2003 and found that utilization (as opposed to price) increases were the significant force behind Rx cost increases at that time. In 2007, NCCI found that state cost differences were driven mostly by the mix of drugs prescribed (as opposed to price or number of scripts). Several drugs, such as ACTIQ® and MOBIC® have shown significant changes in market share over the course of these prior studies. (WCxKit)
 
 
For further historical details, see the previous five studies—available for download at ncci.com

The moral of the story …. make sure you have a good PBM program. Ask your TPA to do a dog and pony show about their current service so you can learn more about it.

 

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  See www.LowerWC.com for more information. RShafer@ReduceYourWorkersComp.com 

 
WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php
 
WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/
SUBSCRIBE: 
Workers Comp Resource Center Newsletter

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
Info@ReduceYourWorkersComp.com.

Workers Comp Claim Frequency Continues Decline in 2009

In a new research brief, NCCI reports that the decline in claim frequency for workers compensation injuries continued in 2009, and economic factors suggest further reductions are likely in 2010.
Preliminary results indicate a decline in claim frequency of 4.0% for 2009. This is on the heels of a 3.4% drop in 2008 and extends a downward trend that started in 1991. (WCxKit)
Note, however, that NCCI’s latest data reveals that, while claim frequency is down, indemnity and medical severities continue to rise, somewhat offsetting the good news.
Key findings in this year’s analysis include:
Preliminary data for Accident Year 2009 reveals a continued overall decline in claim frequency and overall increases in indemnity and medical severities.
Over the latest five years, the decline in frequency continues to be widespread. Frequency declines were observed for all industries, geographic regions, and employer sizes, as well as for most claim types. 
Claims considered “Likely-to-Develop” exhibited a larger percentage frequency decline than those considered “Not-Likely-to-Develop.” 
Some of the more complex claims, such as carpal tunnel and lower back, declined more than average over the latest five years. (WCxKit)
Frequency changes vary considerably by type of injury. 
Injury type differences notwithstanding, frequency changes are relatively consistent by size of loss for claims under $250,000.
To see more analysis, visit: https://www.ncci.com/Documents/research-claims-frequency-sept-2010.pdf

Author Robert Elliott
, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact:  Info@ReduceYourWorkersComp.com or 860-553-6604.
 
FREE TOOLS
WC IQ TEST:  http://www.workerscompkit.com/intro/
WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php
 
JOIN
WC GROUP:  
http://www.linkedin.com/groups?homeNewMember=&gid=1922050/
SUBSCRIBE: Workers Comp Resource Center Newsletter

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

VIRGINIA Workers Compensation Charges Adjusted by Regulators

Virginia regulators plan to hold a hearing on proposed adjustments in premiums charged for workers compensation insurance in October.
According to The Associated Press, the State Corporation Commission stated it has set an Oct. 26 hearing in Richmond on request from the National Council on Compensation Insurance Inc. (WCxKit)
The Florida-based ratemaking group represents insurers licensed to write workers comp insurance in Virginia. Nearly all Virginia employers are required to carry the coverage.
Changes in the overall premium level for the industrial, federal, surface coalmine and underground coalmine classifications will be under review by the group. (WCxKit)
If approved, the adjustments (effective April 1, 2011) would apply for both the voluntary market and assigned risk plan.
  \ Author Robert Elliott,  executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
 
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

Louisiana Workers Comp Rates to Drop More Than 4 Percent

Rates for workers compensation insurance continue to decrease in Louisiana based on a recent report from the National Council on Compensation Insurance (NCCI) that analyzes workers comp rates in 35 states it was announced by Commissioner of Insurance Jim Donelon on July 22.
Most workers comp carriers in Louisiana use the NCCI annual loss cost filing report to help formulate their insurance rates. A recent NCCI loss cost filing showed Louisiana with a 4.3% drop in loss costs approved by the Department of Insurance and effective May 1, 2010. (WCxKit)
This reduction marks an overall drop of 40% in rates since 2005. Companies began adopting the new rates from late March through September 2010. They began using the lower rates within approximately 45 days of approval by the Department of Insurance. This reduction follows a 17.4% decrease in workers comp rates in 2009, an 8.6% reduction in 2008 and a 15.8% reduction in 2007. Louisiana has experienced the second highest reduction of the 35 states NCCI analyzes since 2006.
“The continued reduction in the cost of workers compensation insurance is good news for our state’s business community as businesses struggle with the national economic recession, the current oil spill disaster in the Gulf, and our state’s continued recovery efforts from the devastating hurricanes of 2005 and 2008,” said Donelon. “Our workers compensation insurance market continues to show strong signs of improvement, particularly in the area of improved worker safety.”
Donelon notes improved worker safety leads to fewer workplace injuries across most employment classes, a trend seen over the past few years and the leading cause of these recent rate reductions. The Louisiana Workers Compensation Corp. (LWCC) recently announced it is dropping its rates by 4.1%, as of October 1, a drop similar to the announced rate reduction. (WCxKit)
The total Louisiana workers comp market is estimated to be $900 million per year in premiums. According to the Department of Insurance the top five writers of workers comp insurance in Louisiana in 2009 were: LWCC with 24.4%, Liberty Mutual Group with 15.2%, LUBA Casualty Insurance Co. with 10%, American International Group with 8.8% and Zurich Group with 6.4%.
Note: it will be interesting to see what changes might occur in the rates due to the current BP environmental disaster that has contracters coming to the state from all corners of the country.
  \Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
RTW Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

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